SLO HotHouse participant sues Cal Poly over seed money

A Cal Poly SLO HotHouse participant is taking the nonprofit Cal Poly Corp. to small claims court, suing for what he claims is his half of $10,000 in seed money.

Leonel “Leo” S. Farias filed the small claims suit on Oct. 30, naming the Center for Innovation and Entrepreneurship and Cal Poly Corp. as defendants.

Farias, an agricultural education student, was part of a trio working on “LocalzOwn,” a platform designed to be “the smartest and easiest way to source and sell local artisan food products,” according to a Cal Poly news release last summer. Collaborating with Farias were biomedical engineering student Joseph “Joey” Lyman and computer engineering student Michael Fekadu.

Fekadu dropped out of the project for undisclosed reasons, leaving Farias and Lyman to finish it, according to the claim.

Farias said he couldn’t discuss “why we ended up with two, but we ended up with two,” he said.

Farias said he wants to split the $10,000 award evenly with Lyman, but the CIE refused to do so. He said he filed the suit in small claims court after multiple attempts at mediation. Lyman is not included in the lawsuit and could not be reached for comment.

“I didn’t want to go through this, but I’m hoping something good will come through this,” Farias said, adding that he wanted to see safeguards put in place to protect HotHouse participants from circumstances like his in the future.

According to a copy of the HotHouse Accelerator Membership Agreement, each HotHouse team receives a $10,000 investment, paid in two equal installments “throughout the summer.” However, the money is paid “only as long as the agreement is in effect at the time of payment for that accelerator team and that team is in compliance with this agreement.”

The money is classified as “non-employee compensation” for tax purposes.

It’s unclear whether any of the money was paid out or how the CIE adjusted the original agreement based on the dropped team member.

Tod Nelson, CIE executive director, declined to comment on the lawsuit, referring the matter to Cal Poly spokesman Matt Lazier.

“The CIE leaves it to the individual teams to decide how the funding gets dispersed among their members,” Lazier said.

This story was originally published November 6, 2017 at 4:02 PM with the headline "SLO HotHouse participant sues Cal Poly over seed money."